IRS activity and the Foreign Account Tax Compliance Act will boost asset growth in the US The US will remain the largest high net worth market in the world come 2015. Since the financial crisis in 2008 the US government has stepped up its commitment to ensuring that super-rich individuals with undeclared offshore assets pay their fair share of taxes and repatriate these assets. Since 2009 the IRS has launched three tax amnesties to “encourage� wealthy Americans to pay tax on undeclared offshore assets. With each new amnesty the penalty on assets has increased. On top of this initiative, the launch of the new Foreign Account Tax Compliance Act (FATCA) means that US investors with (declared) foreign financial holdings must report them to the IRS in their annual tax return. The combination of increasing IRS activity and the FATCA is expected to push many US super-rich to repatriate at least some of their offshore assets, thus boosting the value of onshore assets.
The Chinese market will overtake the Japanese market as the second largest by 2015 China is set to become the second largest market by assets held by millionaires by 2015. The limited growth of Japan coupled with the explosive growth of China are the two main reasons for this. However, as far as the Chinese economy is concerned there is still a certain degree of uncertainty regarding a possible crash in the coming years. This would have a knock-on effect on the wealth market in the country, and potentially in the broader Asia Pacific region. A less worrying scenario is the bursting of the Chinese property bubble after years of double digit growth. The first signs of the cooling down in real estate prices started showing toward the end of 2011, with prices flat or declining in many of the major cities. This could, however, be a blessing in disguise for the broad Chinese wealth market, as Chinese millionaire investors tend to allocate a large chunk of their portfolio in real estate investments, meaning the slowdown of the property market could correspond to a massive flow of liquid assets in the liquid asset pool.
Brazil, China, and India will see their liquid asset pools more than triple between 2006 and 2015 The strong growth of Brazil, China, and India will see the cumulative value of the liquid assets held by millionaires triple from $1.5tn to $4.6tn between 2006
White Paper
The Global Wealth Market
21